For Merkel, an Image to Be Managed

By JUDY DEMPSEY

May 13, 2013

BERLIN — Angela Merkel is famous for slowly weighing every possible risk before making a decision. That is exactly what the chancellor is doing now as she ponders attending the all-German Champions League soccer final at Wembley Stadium in London later this month.

With Bayern Munich playing Borussia Dortmund, it should be a given that Ms. Merkel would be in the V.I.P. stands, cheering. But in fact, her appearance there could damage her party as it seeks re-election in September.

This is because the president of Bayern Munich is Uli Hoeness. He has cultivated close ties with Ms. Merkel and her Christian Democratic Union party. This self-made businessman is known for turning Bayern Munich around financially but also for his philanthropy and strong views about corporate social responsibility.

But now Mr. Hoeness is under investigation on suspicion of tax evasion, having admitted to hiding his money in Switzerland. He could end up behind bars. This has shocked Ms. Merkel and her Christian Democrats. “The Hoeness affair has damaged the party,” said Michael Spreng, a political analyst.

One reason is that the opposition Social Democrats have made social justice a big election issue. The wealthy, like Mr. Hoeness, are being criticized for squirreling away money in fiscal havens.

“The Merkel government is seen as protecting the wealthy and ignoring social justice,” said Gerhard Hirscher, a political analyst at the Hanns Seidel Foundation, which is affiliated with the Christian Social Union, the Christian Democrats’ sister party.

That perception was strengthened when the center-right coalition pushed for an agreement with Switzerland that would force German account holders there to pay high taxes on black money but would have exempted them from criminal investigations. The opposition blocked it.

The opposition is also trying to portray the conservatives as corrupt and nepotistic. Horst Seehofer, the popular Christian Social Union premier of Bavaria, moved quickly this month to demand transparency after dozens of his ministers and deputies in the regional Parliament were found to have employed family members on public funds.

Mr. Seehofer and Ms. Merkel know that any scandal besetting the Christian Social Union could sap the conservatives’ strength at the polls in September.

Yet the scandals have not benefited the Social Democrats. The latest polls give them only 24 percent. But for first time in many months, the conservative bloc has fallen below 40 percent. This has rattled the coalition.

“The polls show that Merkel’s Christian Democrats are vulnerable,” said Niels Annen, an analyst at the Friedrich Ebert Foundation, which is affiliated with the Social Democrats.

Ms. Merkel, who remains immensely popular, has distanced herself from the scandals. And over several months, in a bid to capture new voters, she has shifted her party leftward. Indeed, she has been “demobilizing” the opposition, according to Mr. Spreng. She takes their ideas, claiming them as her party’s own.

The conservatives now accept a minimum wage, despite fierce opposition from some Christian Democrats and their coalition partners, the pro-business Free Democrats. Ms. Merkel has accepted board quotas for women. And her party is close to accepting that gay and lesbian couples should be taxed together.

This way, Ms. Merkel can counter accusations that her party is not interested in social justice. “The way Merkel has hijacked several Social Democratic policies is very frustrating,” Mr. Annen said.

Her supporters worry, however, that Ms. Merkel’s modernizing policies have alienated traditional conservatives. “Merkel can afford no more reforms until after September,” Mr. Hirscher said. Instead, she has to win back conservatives who are skeptical of her domestic policies, and of the euro.

Analysts say it could be difficult for Ms. Merkel to deal with the newly established Alternative for Germany party, or AfD.

The AfD leadership, consisting largely of middle-aged professionals and former Christian Democrats, wants Germany to give up the euro. They are convinced that euro zone is economically and financially too diverse to hold together. They are also critical of the bailout packages in which Germany is the main guarantor.

“The AfD damages Merkel’s conservatives,” said Mr. Spreng. This euro-skeptical party could take as much as 4 percent of the votes from the conservatives but also the opposition, according to Allensbach, a polling institute. Ms. Merkel’s supporters are hoping that the euro crisis can be contained until September, robbing the AfD of its momentum.

“Mrs. Merkel will have to work hard to get every conservative vote. That means making sure there’s no staying at home on election day, ” Mr. Annen said.